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Studio pic rights deals carve PPV exemption

Meet the Parents" smashed all box office records for an October movie opening, and, in anticipation of the boffo appeal of the picture, Turner Broadcasting's TBS and TNT had engineered what they thought would be a preemptive bid to buy the exclusive network TV window from Universal.

But when Turner and U started to talk turkey, exclusivity had vanished from the contract. Turner's ardor quickly cooled, and Universal ended up selling "Parents" to the USA Network, pocketing a more-than-ample license fee in the process.

Trouble spot

But the aborted negotiations between Turner and U over "Parents" have trained a spotlight on the escalating tension between the major studios and the network buyers of their movies -- both broadcast and cable.

The source of the tension: a demand by the studios to carve out a perpetual pay-per-view window that will end up competing directly with the license term of the network deal.

"Universal has gazed into its crystal ball and conjured up a potentially vast new revenue stream for its movies," says Jimmy Schaeffler, a new-media analyst for the Carmel Group.

And it's not only Universal. All of the major studios are now including clauses in their contracts that give the studios the right to profit from pay-per-view movie windows throughout the four or five years of the network deal.

Short stop

Until the studios drew up these blueprints, pay-per-view referred solely to a limited four- to six-week window stuck between homevideo and pay TV. (No studio or network executive would speak for attribution on their contractual discussions.)

The studios and the networks have begun haggling over these newly minted PPV clauses because the networks are frightened at the prospect that by the year 2003 (when "Parents" becomes available to USA) millions of people will be able to easily download movies -- for a fee -- on computers linked to TV sets or on souped-up digital set-top boxes.

Instead of tuning in to "Parents" on Saturday night at 8, slavishly beholden to USA's conventional schedule, wired households in 2003 could, at least theoretically, call up the movie at their convenience, untampered with by network censors and uninterrupted by commercials.

Deducting points

These enticing pay-per-view platforms, says one fearful cable executive, could leach precious rating points from the network's schedule, driving down ad rates and causing cable operators to reject future increases in network license fees.

But new-media execs like Ken Solomon say the networks are needlessly whipping themselves into a frenzy. Solomon is president of iBlast, a wireless network that links 225 TV station clients, and hopes in the next few years to be selling PPV movies -- among other services -- on digital decoder boxes.

"Every time a potentially lucrative new platform for movies comes along," he says, "the executives in charge of the current platform freak out."

Studio sales chiefs are trying to calm network fears by insisting movies on demand are the equivalent of a vidstore tucked neatly into your apartment.

After all, these same movies are available at the corner Blockbuster for rental or purchase at the same time they're running on the network. If any ancillary market is going to get hurt by this PPV product, say the studio conciliators, it's homevideo, not the network window.

Solomon makes the further point that "just about all of the broadcast and cable networks that are complaining about the loss of exclusivity are owned by a major studio."

"CBS is concerned about the opening of digital pay-per-view windows," he continues, "but Viacom owns both CBS and Paramount."

So if lots of people in 2003 go to their Web TV instead of CBS and download (for a fee) "Mission: Impossible 2" and "Rules of Engagement," two Paramount movies recently bought by CBS, then Viacom will rake in the fees as it mutters a prayer that CBS not lose too many viewers to the new technology.

Similarly, while ABC and the Disney Channel may begin to fret about ubiquitous PPV, their sister companies Walt Disney Pictures, Touchstone and Miramax are among the studios that will be enriched.

And even though it may be somewhat at the expense of the Fox Network and FX, their siblings 20th Century Fox, Fox Searchlight and Fox 2000 are saying to PPV distributors, The more the merrier, and the sooner the better.

Schaeffler says he's convinced that within a few years, devices like laptop computers, cell phones and Palm Pilots, all connected to the Internet by wireless technology, will be downloading movies at the touch of a button.

Video anywhere

In this scenario, people will be watching "Jurassic Park 3" in the back seat of a car, in an airport waiting room or around a campfire in the woods.

But these folks will also be shelling out hard-earned dollars for the privilege, and that's where the networks hold an edge against the PPV battalions.

As one sales exec puts it: "Consumers are not that stupid. When it comes to paying for a movie or being able to watch the same movie for free on the network, I'll place my bet on the freebie."
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Title Annotation:rights to TV broadcast of 'Meet the Parents'
Comment:WEBS TAKE DIM VIEW OF SHARED WINDOW.(rights to TV broadcast of 'Meet the Parents')
Article Type:Brief Article
Geographic Code:1USA
Date:Oct 23, 2000
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